Pine, Inc.has a 34% contribution margin rate, fixed costs of $62,000, and net income of $80,184.Pine sold 9,200 units for $54 each.What were Pine's operating income and tax rate (if necessary, round your answer to the nearest full percent)?

Question

Quizplus · Accepted Answer

Operating income is calculated as Sales - Variable Costs - Fixed Costs. Given a 34% contribution margin rate, for each dollar of sales, $0.34 contributes to covering fixed costs and profit. With sales of 9,200 units at $54 each, total sales are $496,800. The contribution margin in dollars is 34% of $496,800, which equals $168,912. After subtracting fixed costs of $62,000, the operating income is $106,912. Given a net income of $80,184, the tax rate can be calculated as (Operating Income - Net Income) / Operating Income = ($106,912 - $80,184) / $106,912 = 25%.

Pine, IncHas a 34% Contribution Margin Rate, Fixed Costs of $62,000